Welcome to Wall Street, Main Street and Me

Monday, August 18, 2014

I'm Still Here!

I keep getting emails asking about my plans, my past, my decisions. I am so grateful to you readers. You have made my life a joy in trading. Readers from Brazil, Russia, Argentina, Japan, Miami, Florida! ha. It's pretty incredible. 500 readers per week peek in at this blog, and that makes me so sad to think that I'm not posting here in ways that keep you coming back. I think I handled a lot of the answers in a post on my other (personal) blog:

I'm Still Here! <--Blog article.

I will no longer be trading, but I wish you all success, Traders!

Wednesday, August 6, 2014

Death Knell

Well, I have come to a painful decision.

In the past number of months, everything in my life has gone from bad to worse, financially. In the past two days, my home's air conditioner stopped working. (I came home to 94 degree temps in my house, with three pets with lolling tongues eying me suspiciously.) My van's air conditioning went out the same day, for the second time. And my washing machine stopped working. My computer started misbehaving, even crashed in the middle of a trade!

I don't have much of a trading fund anymore; the world has not been kind to the old broad. I owe a lot of money I can't pay, and I have many, many things that need to be replaced or repaired, all of which takes money. Oh, and I just got hit with a copay on that eye surgery of last year that I was assured was covered by Medicare. Not. I'm not a candidate for bankruptcy (I explored that very seriously). So I have decided to stop trading and use what's left of my fund to help my financial difficulties. Perhaps I will sleep better nights, paltry sum that it is.

Not sure what I'll do with this blog. I'll leave it up for others to peruse, for sure. But just not sure if I'll continue to study and share. There doesn't seem to be much point right now. Maybe it just wasn't meant to be. Shrug.

That's not to say it hasn't been one of the most enjoyable periods of my life! It wasn't trading that did me in. It was the Recession, the housing bubble breakdown, the banks and Wall Street that I, and thousands like me, can thank for their lives falling apart. Oh, and I did some dumb things too, like a reverse mortgage on a house I later couldn't sell, but had to repay. If anything happens to cure said sad situation (can you say Lotto?), then I, like Arnold Schwartenegger, will be back!

Happy trading, you maniacs. I'll miss you.


Sunday, August 3, 2014

Momentum vs Renko

Well, I've been screwing around for days, investigating charts, listening to our online trader group share their own chart setups, and reading, reading, reading. Other blogs, mentor websites, brokerage websites, and all sorts of commentary. The Amazing Thing is that everyone has a different opinion! Imagine that! And there is that tendency to think that your way is the only way. It's just human nature.

But when I was trading options with Tasty Trade, I was more interested in probability %'s on the option chains than I was with charts (other than a simple trend chart) and daytrading was out of the question with a small account. So apart from my very early beginnings in trading (about six or seven years ago), I haven't done much research on charts. And even back then, I was learning how to read candlestick patterns and not examining other kinds of charts.

This Renko Bar chart got me going. Then a trader I know is trading /CL with a tick chart. I had already tried tick charts with a Volume Profile indicator and did very well in papertrading, but the real trading wasn't giving me the certainty I wanted. (Needed! at the time). In search of the Holy Grail...aren't we all?

Well, my next step was to set up a Momentum bar chart. This (as well as Renko bars) are fairly new additions to Think or Swim. You have to buy/pay for them on many other platforms. I wanted to see how they compared in terms of "noise" (cutting down on the choppiness) and ease of reading. I wondered if moving averages worked with both. I wondered what other indicators I could investigate that would look good to my trading eye.

I found a new (to me) indicator called "Spearman." This is what ThinkorSwim says about it and explains the settings:
The Spearman study is a technical indicator used for evaluation of trend strength and turning point detection. This study calculates Spearman's rank correlation coefficient in order to reveal correlation between actual price changes and extremely strong trend. The Spearman indicator registers two sets of data: prices of each bar during the specified period in their chronological order and the same prices sorted ascendingly. Spearman's ratio found for these two sets is then multiplied by 100; value of +100 suggests strong correlation with uptrend and -100, with downtrend.

Since the extreme values of -100 and +100 are rarely recorded, values of +80 and -80 might be used as overbought and oversold levels respectively. Plotting the Spearman indicator along with its short SMA (e.g., three day SMA on daily charts) might give an idea when to expect the turning points: look for the crossovers of the two plots. Useful information can also be obtained by analyzing action of the indicator in relation to zero level: crossing above the zero level might be an opportunity for the Long Entry while falling below zero might suggest the Short Exit.

Input Parameters
price The price to be used in calculation of Spearman's ratio.
length The number of bars in the period on which the prices are registered.
average length Defines period of SMA of Spearman indicator.
over bought Defines value of the overbought level.
over sold Defines value of the oversold level.

Spearman The Spearman plot.
SpearmanAverage The SMA of Spearman indicator.
OverBought The overbought level.
ZeroLine The zero level.

My next step was to configure, side by side, a Momentum Chart (on the left) and a Renko Chart (on the right) using similar indicators.

Here are the screens from my TOS Chart setup: Momentum first, then Renko.

I had to go back and add the Impulse indicator (blue bars) to the Momentum chart. And here are the charts, side by side: Momentum (10 ticks) on the left; Renko (10 ticks) on the right. The red lines are mine, just drawn to put your attention on how the PPS (arrows) and the Spearman crossovers line up with reverses! The moving averages and MACD are not working so well here. Maybe play with the setting some more.

Look at that Spearman indicator!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! If that's not the holy grail, what is??? I'm pleased as punch and going to start papertrading this baby tonight! MACD is looking like it's lagging even more than we know. (we KNOW it's a lagging indicator, right?)

Which one do I like most? Definitely, the Momentum. Look at the 14:00 time frame. On the Renko chart, just before 14:00 there's a yellow arrow (bearish) and then immediately a blue arrow reversal. Those two arrows don't even show up on the Momentum chart! Less noise! I like that. I'm getting happier. Knowledge is power

P.S. I smoothed out the MACD with a 3/10 setting (which matches the Spearman). I notice that the Momentum TTM Wave is smoother too than on the Renko chart. Momentum bars get my vote on this comparison, hands down. Less is more! ##